Federal Reserve Candidate Herman Cain Is the Reason Tipped Workers Still Make $2.13

On Thursday, Bloomberg reported that President Trump is considering former presidential candidate Herman Cain to sit on the board of the Federal Reserve.

That’s according to reporter Jennifer Jacobs, who said that five sources confided to her that not only was Herman Cain being considered, but that he had actually met with President Trump at the White House on Wednesday to discuss a possible appointment to the Fed Board.

Herman Cain was at the White House yesterday to talk about this, I'm told.

Nominating Cain for the Fed board raises the prospect of a US Senate confirmation hearing that resurfaces the sexual harassment allegations that emerged during Cain's presidential campaign.

Aside from his presidential campaign — best known for his “9-9-9” tax plan that would have drastically raised taxes on the working class while drastically cutting taxes on corporations and the wealthy — Cain is also known for his role as CEO of Godfather’s Pizza and the former president of the National Restaurant Association in the late 1990s, after a stint on the Omaha Branch of the Kansas City Federal Reserve in the late 1980s and early 1990s.

And as the head of the chief lobbying organization for restaurants, Herman Cain successfully lobbied to keep wages low for tipped workers like servers and bartenders.

The minimum wage for tipped workers has been stuck at $2.13/hour since 1991, but thanks to Cain’s efforts, it’s stayed there. As Restaurant Opportunities Centers United (ROC United) wrote in 2016, Herman Cain successfully lobbied Congress in 1996 to uncouple the minimum wage for tipped workers from the federal minimum wage, so as Congress raised the federal minimum wage, wages for servers, bartenders, and other workers depending on tips for income stayed frozen at $2.13.

ROC United claims that, if the minimum wage for tipped workers was the same as the federal minimum wage, it would lift more than 700,000 workers out of poverty.

“In addition, more than $12 billion would be pumped into our economy because of workers’ having more spending power, leading to more jobs and more economic growth,” Deborah Weinstein, executive director of the Coalition on Human Needs, stated in a ROC United press release. “Doing right by these workers isn’t just good for the workers – it’s good for the economy.”

While one prevalent argument in favor of keeping the minimum wage for tipped workers so low is because customers’ tips make up the difference in between the tipped minimum wage and the state minimum wage, the Economic Policy Institute (EPI) pointed out that tipped workers still make less on average ($10.22/hour) than the average wage for all workers ($16.48/hour).

“Customers’ tips pay the $5.12 difference between the federal tipped minimum wage and the federal regular minimum wage,” the EPI wrote in a 2014 report. “Thus, customers provide a subsidy to employers of tipped workers worth more than twice the wage these employers are required to pay their tipped staff.”

“While the poverty rate of non-tipped workers is 6.5 percent, tipped workers have a poverty rate of 12.8 percent. Tipped workers are thus nearly twice as likely to live in poverty as are non-tipped workers,” the EPI report continued. “Yet poverty rates are significantly lower for tipped workers in states where they receive the full regular minimum wage.”

If nominated, Herman Cain would have to go before the U.S. Senate to be confirmed, which would likely revive not only his position on keeping tipped workers’ wages abnormally low, but also the sexual harassment allegations against him that came up in his short-lived presidential run in 2012.

Tom Cahill is a contributor for Grit Post who covers political and economic news. He lives in Bend, Oregon. Send him an email at tom DOT v DOT cahill AT gmail DOT com.

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